Sun Pharmaceutical Industries Ltd did well in the December quarter. Net sales rose by 33% to Rs.2,852 crore, while its net profit rose by 32% to Rs.881.3 crore. Its performance was ahead of the Street’s estimates.
In the US market, its sales rose by 32% to $276 million, or Rs.1,467 crore at the current exchange rate. Cancer drug Lipodox contributed significantly to the company’s revenue. Sun’s sales have risen by 13.1% sequentially, which also indicates healthy growth in its base business since Lipodox contributed to revenue in the previous quarter as well.
In the domestic market, sales were up by 13% over the year-ago period, but underlying growth was 19% which is after adjusting for a change in the treatment of returned goods and discounts. It launched seven products during the quarter, taking the total to 22 launches in the year so far. It has grown ahead of the market, which has seen many companies face slower growth in the December quarter.
In rest of the world markets too, Sun has done very well, with sales rising by 31% in dollar terms, compared with 21% in the second quarter. Sales of active pharmaceutical ingredients (API), or bulk drugs, too did better with an increase of 36% compared with 10% in the preceding quarter. However, API sales tend to be lumpy and for the nine-month period, revenue was up by 27%.
Sun Pharma’s operating profit margin did narrow by 56 points over a year ago, but it widened by 37 points sequentially. Though an increase in the cost of goods to sales is the main reason for the decline in its margin, it also incurred a Rs.28.3 crore severance charge. This was a one-time charge pursuant to its acquisition of DUSA, which is being consolidated with effect from 20 December. Excluding this charge, its margins were actually up by 43 basis points over the year ago period, and by 43 points sequentially.
In the coming quarters, the full impact of its acquisition of DUSA and the generics business of URL Pharma Inc. will start contributing to its results. Though they may add to revenue, in the near term there may be some impact on margins.
Sun’s shares were flat at 1.07pm while the BSE Healthcare Index was down by 0.56% in intra-day trading on Friday.